Latino-Owned Bank Project Is Canceled : Banking: Organizers said they fell $1.4 million short of their goal to raise $4 million.

Amid a generally robust climate for bank startups, an East Los Angeles group has shelved plans to open California’s fifth Latino-owned bank after failing to raise enough funds for the widely publicized, grass-roots venture.

The setback comes amid stepped-up efforts by consumer activist groups to pressure banks to expand services in ethnic urban neighborhoods, such as East Los Angeles, which have long complained about being under-served by lenders.

Organizers of Angeles National Bank said they fell $1.4 million short of their goal to raise $4 million to open the bank in a converted auto dealership on Atlantic Boulevard and Eagle Street. The group scrapped its plans after an extensive 18-month, grass-roots fund-raising effort that sought contributions as small as $1,000 from individual investors.

“Our stock offering did not generate the required amount of capital in the prescribed period of time,” explained James E. Roberts, an organizer and former Crocker Bank executive who was to head Angeles National Bank. “The general public is the big loser. They would have had their own bank. The Latino market is underestimated and under-served. Our bank would have gone after” that market.

Although California has the nation’s largest concentration of Latinos, it is home to only four Latino-owned banks, the same as New York, but behind Texas with 13 and Florida with 7, according to the Federal Reserve Board.

The growth of Latino-owned banks in California has been thwarted by strong promotional efforts by major banks such as Bank of America, which has many branches throughout Latin America, said Gonzalo Fernandez, senior vice president for City National Bank in Newport Beach.

Roberts said Angeles National Bank’s escrow agent this month will begin refunding money to more than 100 investors. Meanwhile, Roberts and several others say they are studying the possibility of buying an existing bank and opening a branch in East Los Angeles.

Ironically, last year was one of the best years for new bank startups in California as well as for the establishment of new Latino-owned banks.

Ten applications for new state chartered banks were approved last year in California, compared to two in 1988, according to the California Banking Department. Meanwhile, the number of Latino-owned banks nationwide grew to 34 as of September, 1989, from 27 a year earlier, according to the Federal Reserve Board.

However, Roberts said negative media coverage of the nation’s savings and loan crisis as well as investor skittishness in the wake of October’s stock market mini-crash cooled interest in Angeles National Bank before the expiration of a Dec. 17 deadline for raising the required start-up capital.

Under rules established by the Office of the Comptroller of the Currency, which regulates national banks, organizers of a new bank have 18 months to raise money for the venture. Roberts and a group of about half a dozen other Latino business executives in Los Angeles announced the formation of Angeles National Bank in June, 1988.

With legal fees, building rental and salaries running $250,000 or more per year, setting up a new bank can be costly. The minimum amount of money to completely capitalize a bank varies, but in recent years the Office of the Comptroller of the Currency has been requiring a minimum of $4 million to establish banks in urban areas, experts say.